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DISPARATE IMPACT OR NEGATIVE IMPACT?: THE FUTURE OF NON- INTENTIONAL DISCRIMINATION CLAIMS BROUGHT BY THE ELDERLY Sandra F. Sperino In 2005, the U.S. Supreme Court interpreted the Age Discrimination in Employment Act (ADEA) as permitting plaintiffs to proceed under a disparate impact theory of discrimination. This decision affirms that plaintiffs who are at least forty years old may challenge employment decisions resulting from policies that are neutral on their face but have a disproportionate impact on individuals in the protected class. Sandra F. Sperino is a Visiting Assistant Professor of Law at the University of Illinois College of Law, where she teaches Employment Discrimination and Civil Procedure. She received her B.A. from Texas Tech University in 1995, an M.S. in journalism from the University of Illinois in 1999, and her J.D., summa cum laude and Order of the Coif, from the University of Illinois in Professor Sperino served as Editor-in-Chief for the University of Illinois Law Review. Upon graduation, Professor Sperino clerked for the Hon. Donald J. Stohr of the U.S. District Court for the Eastern District of Missouri, from 1999 to Thereafter, Professor Sperino was an attorney for the law firm of Lewis, Rice & Fingersh, LC, in St. Louis, Mo., where she practiced labor and employment law, commercial litigation, and appellate litigation. Professor Sperino is a member of the American Bar Association s Labor and Employment Law section. She is indebted to Elaine W. Shoben, Charles A. Sullivan, and Jarod S. Gonzalez for their insightful comments on earlier drafts of this article. She also would like to thank Richard L. Kaplan for sparking her interest in elder law issues. 340 The Elder Law Journal VOLUME 13 Although this decision was heralded as a new tool to fight age discrimination in employment, Professor Sperino argues that the decision will have serious and detrimental effects on the ability of elderly employees to seek redress for unfavorable employment decisions. Professor Sperino states that the Supreme Court, while finally recognizing that disparate impact claims are viable under the ADEA, also placed many obstacles in the way of litigants who want to challenge such policies. These new obstacles, along with decreased incentives for elderly plaintiffs to pursue disparate impact claims, will result in many potential claims being abandoned or being pursued unsuccessfully. I. Introduction On March 30, 2005, the Supreme Court issued its decision in Smith v. City of Jackson, Mississippi, recognizing the viability of disparate impact claims under the Age Discrimination in Employment Act. 1 In reporting this decision, the popular press announced that the Supreme Court took a pro-worker interpretation 2 of the ADEA that lower[ed] the bar over age discrimination 3 and made it easier... to sue. 4 Linda Greenhouse, in an article written for the New York Times News Service went so far as to pronounce that the decision was a boon for age-bias lawsuits. 5 In one sense the case did expand the theories available to plaintiffs under the ADEA by definitively holding that plaintiffs may proceed under a disparate impact analysis. Prior to the Supreme Court s decision, five circuit courts held that the ADEA did not permit advancement of a disparate impact claim. 6 However, the Smith decision 1. Smith v. City of Jackson, Miss., 125 S. Ct (2005). 2. See, e.g., Linda Greenhouse, A Boon to Age-Bias Suits, DESERET MORNING NEWS (Salt Lake City, Utah), Mar. 31, 2005, at A U.S. Supreme Court Lowers the Bar over Age Discrimination, GLOBE & MAIL (Toronto), Apr. 1, 2005, at C2. 4. Charles Lane, Ruling Eases Way for Age Bias Lawsuits, ST. LOUIS POST- DISPATCH, Mar. 31, 2005, at A1. 5. See, e.g., Greenhouse, supra note See infra Part IV.B. This article is concerned with disparate impact claims under the ADEA, as opposed to disparate treatment claims. The Supreme Court has provided the following succinct description of the two types of claims: Disparate treatment... is the most easily understood type of discrimination. The employer simply treats some people less favorably than others because of their race, color, religion [or other protected characteristics.] Proof of discriminatory motive is critical, although it can in some situations be inferred from the mere fact of differences in treatment.... [C]laims that stress disparate impact [by contrast] involve employment practices that are facially neutral in their treatment of different groups but that in fact fall more harshly on one NUMBER 2 DISPARATE IMPACT OR NEGATIVE IMPACT? 341 also placed severe limitations on the use of the disparate impact theory in the age discrimination context. These restrictions make disparate impact claims based on age an even less attractive claim for plaintiffs than similar claims under Title VII, 7 which are already underutilized by litigants. The Supreme Court s opinion in Smith also highlights a growing unease in the courts about the ability of statistics alone to establish age discrimination. This article argues that the Smith decision and other recent rulings in ADEA disparate impact cases severely affect elderly workers incentives to prosecute and prove disparate impact claims, even more so than younger workers within the ADEA s protected class. 8 The root cause of this disparity is the ADEA s damages provision and other practical realities, which afford elderly plaintiffs (and their attorneys) less opportunity to obtain large judgments in their favor, as compared to younger litigants. Given the decreased availability of damages and the difficulty and expense that already attends the prosecution of any disparate impact claim, elderly plaintiffs have fewer incentives to pursue a disparate impact claim than other litigroup than another and cannot be justified by business necessity. Proof of discriminatory motive... is not required under a disparateimpact theory. Hazen Paper Co. v. Biggins, 507 U.S. 604, 609 (1993) (alteration in original) (citation omitted). 7. Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e to e-17 (2000), prohibits certain employers from using discriminatory employment practices based on a person s race, color, religion, national origin, or gender. 8. When the article refers to the protected class or the protected group, it is referring to all individuals who are at least forty years of age and protected by the ADEA. 29 U.S.C. 631(a) (2000). For the purposes of this article, the term elderly is defined to include all individuals aged sixty and older. Although the author acknowledges that defining the term elderly is problematic, there is ample support for defining the term as including all individuals aged sixty and older. See, e.g., MASS. ANN. LAWS ch. 149, 52D(a) (LexisNexis 1999) (defining elderly as individuals aged sixty and over); Margaret F. Brinig et al., The Public Choice of Elder Abuse Law, 33 J. LEGAL STUD. 517, 532 n.31 (2004) (noting that most of the applicable state statutes defined the term elderly to include individuals who had reached the age of sixty); Carolyn L. Dessin, Financial Abuse of the Elderly: Is the Solution a Problem, 34 MCGEORGE L. REV. 267, 295 nn (2003) (citing statutes that protect individuals aged sixty and over). It should be noted that the term can be, and has been, defined differently. See, e.g., 42 U.S.C. 1471(b)(3) (2000) (federal statute for rural elderly housing assistance defining elderly as sixty-two years old and older); Treas. Reg (a)(4) (2002) (defining an elderly individual as a person who is sixty-five years old or above); Brinig, supra, at 532 n.31 (noting that one state statue defines the term as over age fifty-five and others age sixty-five and over); Lucinda M. Finley, The Hidden Victims of Tort Reform: Women, Children, and the Elderly, 53 EMORY L.J. 1263, 1287 (2004) (defining the term elderly to mean over age sixty-five). 342 The Elder Law Journal VOLUME 13 gants. Any factor that makes it more difficult for elderly litigants to prove an ADEA disparate impact claim shifts the calculus even further in the direction of foregoing such claims. Not only do elderly workers have fewer incentives to pursue disparate impact claims, but it is also more difficult for these individuals to establish that a policy had a disparate impact on them. As discussed in more detail below, given the limited number of elderly employees within the work force, there are likely to be few elderly individuals at any one workplace. If a particular employment practice has a disparate impact only on elderly workers, it is likely that the number of workers at a given workplace will not be enough to create a statistically significant sample for comparison. This makes it difficult for elderly plaintiffs to assert disparate impact claims against practices that affect only those over the age of sixty. Any change in disparate impact law that heightens the requirements for establishing a disparate impact makes it less likely that elderly workers will be able to prove their statistical case. Further, there is a growing recognition and acceptance among the courts that employment practices can have a disparate impact on older individuals without necessarily being discriminatory. As recognized in Smith, age, unlike race or other classifications protected by Title VII, not uncommonly has relevance to an individual s capacity to engage in certain types of employment. 9 Additionally, the Supreme Court itself has declared that age discrimination is less prone to occur within the workplace than other types of discrimination. 10 This apparent skepticism about disparate impact claims based on age will provide district courts with an enhanced ability to grant summary judgment in favor of defendants, even when a statistical disparity exists. Such skepticism will be especially problematic for elderly litigants, who, more than others within the protected class, are likely to face increased scrutiny about their ability to remain in the work force. This article begins in Part II by undertaking a historical review of the disparate impact theory of discrimination 11 under both the ADEA 9. Smith v. City of Jackson, Miss., 125 S. Ct. 1536, 1545 (2005). 10. Id. 11. Commentators continue to debate, in the ADEA context, whether disparate impact and disparate treatment are separate claims or simply separate evidentiary rules for proving the same cause of action discrimination. For a good discussion of this issue, see Michael Evan Gold, Disparate Impact Under the Age Discrimination in Employment Act of 1967, 25 BERKELEY J. EMP. & LAB. L. 1, (2004). Any reference in this article regarding disparate impact claims or disparate NUMBER 2 DISPARATE IMPACT OR NEGATIVE IMPACT? 343 and Title VII. Part III discusses the Supreme Court s holding in the Smith case. In Part IV, the discussion focuses on the disparate impact landscape prior to Smith, with an emphasis on the functional realities that lessen the incentives for, and the ability of, elderly litigants to pursue disparate impact claims. Part V of the article examines the difficulties that elderly plaintiffs will have in proceeding under a disparate impact theory. Finally, Part VI notes the few positive aspects of the Smith decision from the plaintiff s perspective. II. A Historical Review of Significant Disparate Impact Developments A. Passage of the ADEA Congress enacted the Civil Rights Act of 1964 to prohibit employment discrimination on the basis of an individual s gender, national origin, sex, race, color, or religion. 12 During the debate leading to the passage of the Act, Congress considered adding provisions to Title VII to also prohibit age discrimination. 13 Instead of amending Title VII, Congress directed Secretary of Labor Willard Wirtz to make a full and complete study of the factors which might tend to result in discrimination in employment because of age and of the consequences of such discrimination on the economy and individuals affected and to propose remedial legislation. 14 The report Wirtz delivered to Congress advocated that action be taken to prohibit discrimination in employment based on age; however, the report also indicated that age discrimination was different than the types of discrimination Congress had prohibited in the Civil Rights Act of Wirtz noted that unlike other forms of discrimination, age discrimination is not typically based on dislike of an indiimpact evidentiary standards are merely descriptive of disparate impact itself, as there is no intention to make any comment regarding this larger issue, which is outside the scope of this article. 12. Civil Rights Act of 1964, Pub. L. No , 78 Stat. 241 (codified as amended at 42 U.S.C. 2000e to e-17 (2000)). 13. Age Discrimination in Employment: Hearings on S. 830 and S. 788 Before the S. Comm. on Labor of the Comm. on Labor & Public Welfare, 90th Cong. 29 (1967) (statement of Sen. Smathers); 113 CONG. REC. 23, (1967) (statement of Sen. Javits). 14. Smith, 125 S. Ct. at Joint Appendix at *36 37, Smith v. City of Jackson, Miss., 125 S. Ct (2005) (No ), 2004 WL (Willard Wirtz, The Older American Worker Age Discrimination in Employment Report of the Secretary of Labor to the Congress Under Section 715 of the Civil Rights Act, Letter of Transmittal). 344 The Elder Law Journal VOLUME 13 vidual or intolerance for the entire protected group. 16 Instead, Wirtz found that the most problematic type of discrimination facing older workers was discrimination based on unsupported general assumptions about the effect of age on ability. 17 While Wirtz recognized that age discrimination did exist, he also noted that older workers might be disparately affected by factors that correlate with age, but that are not discriminatory. Wirtz noted that declining health among older workers may make them less able to perform job functions and may keep them out of the job force. 18 He indicated that either some older workers lack the educational skills required for newer jobs or younger workers have better educational credentials for these positions. 19 The report also emphasized that rapid technological advances may leave older workers with outdated skills in the workplace. 20 Wirtz s recognition that age may sometimes correlate with other reasonable, nondiscriminatory job factors plays an important role in the development of disparate impact analysis under the ADEA. In 1967, Congress enacted the ADEA. 21 Congress indicated that the purpose of the ADEA was to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; [and] to help employers and workers find ways of meeting problems arising from the impact of age on employment. 22 Congress listed four specific employment practices that it was concerned about, indicating that older workers find themselves disadvantaged in their efforts to retain employment, and especially to regain employment when displaced from jobs, that the setting of arbitrary age limits regardless of potential for job performance has become a common practice and that older workers should be promoted based on their ability. 23 Thus, the ADEA made it unlawful for an employer to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of em- 16. Id. at * Id. 18. Id. at * Id. 20. Id. at * Age Discrimination in Employment Act of 1967, Pub. L. No , 81 Stat. 602; see also 29 U.S.C (2000) (current version of ADEA with amendments added after the initial enactment) U.S.C. 621(b). 23. Id. 621(a) (b). NUMBER 2 DISPARATE IMPACT OR NEGATIVE IMPACT? 345 ployment opportunities or otherwise adversely affect his status as an employee, because of such individual s age. 24 As originally enacted, the ADEA only prohibited discrimination against individuals who were at least forty years of age and who were not older than sixty. 25 Congress subsequently increased the protection of the Act to those aged forty to seventy, 26 and in 1986 amended the ADEA to eliminate the upper age limit. 27 In its current iteration, the ADEA protects individuals who have reached the age of forty from unlawful discrimination. 28 The statutory text of the ADEA provides certain instances in which an action will not be considered to violate the Act. For example, an employer may make an employment decision based on age if age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business, 29 may observe the terms of a bona fide seniority system that is not intended to evade the purposes of the ADEA, 30 and may observe the terms of a bona fide employee benefit plan. 31 The ADEA also expressly provides that an employer may discharge or discipline an employee for good cause. 32 Additionally, the ADEA permits compulsory retirement at the age of sixty-five for certain individuals classified as bona fide executives or high policymakers under specified circumstances. 33 Most importantly for the purposes of this article, the ADEA contains specific language allowing an employer to take an action where the differentiation is based on reasonable factors other than age. 34 As discussed in more detail in Part III.B., below, Title VII does not contain this same exception, which is commonly referred to as the RFOA exception. The presence of the RFOA exception in the ADEA is an im- 24. Id. 623(a)(2). 25. Age Discrimination in Employment Act of 1967, Pub. L. No , 12, 81 Stat. at Age Discrimination in Employment Act Amendments of 1978, Pub. L. No , 12, 92 Stat. 189, 189 (1978). 27. Age Discrimination in Employment Amendments of 1986, Pub. L. No , 2(c), 100 Stat. 3342, 3342 (1986) U.S.C. 631(a). 29. Id. 623(f)(1). 30. Id. 623(f)(2)(A). 31. Id. 623(f)(2)(B). 32. Id. 623(f)(3). 33. Id. 631(c)(1). 34. Id. 623(f)(1). 346 The Elder Law Journal VOLUME 13 portant factor in the Smith decision s differentiation between the disparate impact analysis under the ADEA and other causes of action. B. Development of Disparate Impact Law: Griggs v. Duke Power Co. Because the ADEA, like the originally enacted Title VII, contained no specific wording providing for a disparate impact cause of action, it would remain for the courts to determine whether plaintiffs were required to prove intentional discrimination or could establish discrimination where no discriminatory animus was present. The U.S. Supreme Court examined the disparate impact theory in Griggs v. Duke Power Co., a Title VII case. 35 The background facts of Griggs are important to understanding the theoretical underpinnings of disparate impact claims. The plaintiffs in Griggs were a class of African American employees currently employed at, or who were job applicants at, the Dan River Steam Station of the Duke Power Plant, a power generating facility in North Carolina. 36 The district court had found that the company openly discriminated against African American employees in its hiring and placement practices prior to the enactment of the Civil Rights Act of The plant discriminated against African American employees by limiting their placement to only one of the plant s five operational units the Labor Department. 38 The highest paid employees in the Labor Department were paid less than the lowest paid employees in other departments, who were all white. 39 In 1955, the company implemented a policy requiring job applicants for every department other than the Labor Department to possess a high school diploma. 40 The policy also required employees wanting to move from the Coal Handling Department to one of the other three non Labor Departments to possess a high school di U.S. 424 (1971). 36. Id. at 426; Griggs v. Duke Power Co., 420 F.2d 1225, 1227 (4th Cir. 1970). 37. Griggs, 401 U.S. at Id. 39. Id. 40. Id. NUMBER 2 DISPARATE IMPACT OR NEGATIVE IMPACT? 347 ploma. 41 Employees who wanted to change positions between other departments were not required to have a high sc
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